Question

1. Discuss three propositions of care ,skill, diligence as enumerated in Re City Equitable Fire Insurance Company Ltd. .(10 Marks)

Answer 1

Re City Equitable Fire Insurance Co is a case held in the United Kingdom. It is a case related to the duty of care of the directors. The case made successful amendments in the companies act wherein now the directors have the responsibility of care towards employees so that the employees know what the company or manager expects from the subordinates. The case initially originated from the liquidity and insolvency of an Insurance company. It was because of the illegal and malpractices practiced by the managing directors of the company. The justice in the case held that the director should follow the principles of honesty and integrity. The directors should also attend all the board meetings to understand the company's condition. The directors should also take steps to delegate the work to their subordinates and the related officials. However, while entrusting the employees with the tasks, the director should also review the past misconduct records of the employees. The judge continuously mentioned the concept of reasonableness. It differentiated the current judgment from the previous decisions. It also sets the reforms in the duties of the directors in a company. However, the Parliament has to implement the changes into laws to implement these successfully.